Samsung chief exec resigns citing an “unprecedented crisis”

The chief executive of Samsung Electronics has resigned, citing an “unprecedented crisis” around the smartphone giant.

Kwon Oh-hyun, who has been with the company for 32 years, said he would step down as chief executive and vice chairman in March. His departure comes despite Samsung Electronics projecting record quarterly profits

The company’s sales are booming thanks to record demand at its microchip and display units and improving sales of its latest smartphones, but it has been hit by a corruption scandal at the highest level.

Jay Y Lee, the heir to the Samsung empire, was sentenced to five years in prison in August for bribery and perjury after he was accused of overseeing large payments to foundations run by South Korea’s former president Park Geun-hye.

Mr Lee is vice-chairman of both Samsung Electronics and the wider Samsung conglomerate, which includes interests in property, financial services and healthcare. But the electronics company, best known as the world’s biggest smartphone seller, is its crown jewel.

“As we are confronted with unprecedented crisis inside out, I believe that time has now come for the company start anew, with a new spirit and young leadership to better respond to challenges arising from the rapidly changing IT industry,” Mr Kwon said in a letter to staff.

“It is something I had been thinking long and hard about for quite some time. It has not been an easy decision, but I feel I can no longer put it off.”

Samsung did not announce a successor. It technically has three chief executives but the other two, Jong-Kyun Shin and Yoon Boo Keun, have stepped back from the day-to-day running of the company.

“With Jay Y Lee also likely to be out of the picture for a few years, the way is open for new blood to take the helm of Samsung and clean-up these long-standing issues,” said Richard Windsor of Edison Investment Research.

It came as Samsung Electronics announced that it expected to report revenues around 62 trillion won (£41bn) in the third quarter, up from 47.8 trillion in the same period last year when the company was engulfed by the crisis of its faulty Galaxy Note 7.

It said operating profits would be around 14.5 trillion won, compared to 5.2 trillion won a year ago. While it has seen record demand for its latest Note 8 phone, the biggest driver of revenues have been its memory and display divisions.